The UK’s fleet of nuclear power stations is vital to powering the country. With the existing fleet of seven accounting for one-fifth of overall capacity, a single plant coming offline, ramps up pressure on the grid.

In the coming years, as coal continues to be removed, the need to fill the void with a reliable baseload generation method will only increase, and nuclear is ideally placed to play the part. Renewables have come down in cost, and increased in efficiency and capacity, but simply cannot compete on reliability in time.

However, the current nuclear fleet cannot deliver what is required. Already operating for 27 years, Sizewell B is as modern as it gets, while the majority of the advanced gas-cooled reactors (AGRs) date back to the 1980s. Hinkley Point B and Hunterston B date back to 1976. Look ahead to 2030, and Sizewell B is the only existing plant scheduled to still be in operation.

That means replenishing the fleet, following up the first phase of plants from the 1950s and 1960s, and those of the second phase still operational, with the UK’s third phase of nuclear power plants. However, despite the need and despite repeated attempts to kickstart a new nuclear renaissance, it appears to be getting harder rather than easier.

At the same time as the contribution of renewables such as offshore wind has increased as the costs have fallen, the cost of nuclear has been rising. A decade ago, when the latest push for a third phase of nuclear power began, nuclear engineering ­company Areva said new plants could be built at a cost of £24/MWh. Last year, EDF had to be offered a strike price of £92.50 before it would make an investment decision in favour of Hinkley Point C.

Much of that price rise has been beyond the control of the government, especially the meltdown of all three reactors at Japan’s Fukushima plant in 2011 following an earthquake, which caused many worldwide to question whether nuclear power had a future at all. On top of that, a worldwide slump in the price of oil abruptly made new nuclear even more expensive compared with gas. The new government appears to agree, and says that any plants after Hinkley Point C will have to come in at a lower cost. However, far from expressing a willingness to cut their prices, several companies involved in the supply chain have been signalling that they want to dial down their involvement or quit nuclear entirely.

Further, the news that the UK’s departure from the EU will also see it extricate itself from the treaties and agreements of Euratom has thrown a whole new array of uncertainties into the mix, from how and where the UK can deal with nuclear waste, to whether it will even be able to buy new fuel supplies.

Uncertainty is never desired in a sector, and nuclear undeniably finds itself riddled with it right now, but in as much as it plays a big part today, it is likely to play a big part tomorrow. With the right policies in place, and the opportunity to progress with the potential of small modular reactors (SMRs), the third phase will likely see the light of day.

New generation

Hinkley Point C. The 3.2GW plant has secured a strike price of £92.50/MWh and funding from CGN of China. It is budgeted to cost £18 billion (see box, p15).

Sizewell C. This is the proposed 1.6GW sister station to Hinkley Point C and would be developed alongside the existing Sizewell B plant on the Suffolk coast. If developed, the strike price for this plant, and Hinkley Point C would drop to £89.50/MWh.

Bradwell B. This would be the third new nuclear power station that EDF would be involved with. It would be developed in conjunction with China’s CGN in Essex.

Moorside. This project is being developed by NuGen and it would bring online 3.4GW capacity, although the project is suffering difficulties after Engie, exited the consortium, forcing Toshiba to buy its stake (see box, below).

Wylfa Newydd. This will be first nuclear power station build by the Horizon Nuclear Power team, which is a subsidiary of Hitachi. It aims to generate at least 5.4GW of power.

State of the nation

Real progress on new-build nuclear ­depends on the political appetite for it.

Back in 1995, in the midst of the utility privatisation wave, the UK government sold its eight most advanced nuclear plants. It decided that the likes of Sizewell B and Torness would flourish under private ownership and would be joined by a fleet of new plants paid for and developed with private finance.

That didn’t happen. Despite a series of attempts and interventions to try and inspire a “nuclear renaissance”, none was forthcoming. It took until Theresa May for a final go-ahead to be given, last year, for Hinkley Point C.

Such indecisive progress is neither good for ensuring energy security, nor for enabling the ambition of total decarbonisation of the UK’s electricity supply by 2050. With a new fleet of nuclear plants supposed to provide 35 per cent of the country’s capacity, nuclear is vital to the achievement of decarbonisation goals. “We’re trying to build a diverse source of energy projects and new nuclear is absolutely a core part of that,” said then energy secretary Andrea Leadsom, to a committee of MPs last year.

First new development in more than 30 years

Scheduled to come online in 2025, Hinkley Point C is set to become the first plant for more than 30 years. But getting the green light for the project, which will have a capacity of 3.2GWh – enough to meet 7 per cent of total demand – has proved challenging.

To secure the private backing of French-owned energy company EDF, the government agreed a heavily criticised deal whereby it will pay a minimum of £92.50/MWh for the first 35 years of its operational life. The government defended the strike price as being necessary to get EDF to commit to the estimated £18 billion cost of building the plant. But with that rate currently standing at more than twice the current price on the wholesale market, it continues to be criticised as exorbitant.

Such factors serve to maintain concerns over Hinkley Point C, but beg bigger questions as to the proposed developments lying in its wake.

The urgency of the situation is encapsulated in the exodus of investors from the NuGen consortium supposedly building a new nuclear power plant at Mooreside in Cumbria.

Already long since abandoned by founding members SSE and Iberdrola, NuGen has run into potentially terminal trouble this year. Financial difficulties at consortium partner Toshiba – the result of its reactor manufacturing subsidiary going bust – caused Engie to offload its 40 per cent stake in the venture. As the last standing member of the consortium, Toshiba was forced to pick up the £111 million tab, notwithstanding its desire to dial down its global new nuclear investments.

With no replacement investment looking likely, government is under increasing pressure to intervene to save the Moorside project, and to protect other new nuclear schemes.

Understood to be asking for new nuclear projects to clear strike prices 20 per cent lower than what was offered to Hinkley Point C, government is unlikely to take stakes in projects directly. Unions and trade groups argue, however, that it must provide stake-backed loans to ensure nuclear plants have a future in the UK.

Euratom exit an obstacle

Regardless of government’s response to these calls, another major obstacle must first be overcome. When the UK exits from the European Union, it will also cease membership of industry regulator Euratom and face the threat of being barred from a wide range of arrangements critical to the sector’s operation. Industry experts even suggest that exitign Euratom it could result in the UK being unable to purchase new fuel supplies.

Alleviating such risks will require diligent and shrewd negotiations with Euratom and other international bodies, and the creation of a UK equivalent to manage and oversee everything from operational standards to the commercial arrangements around waste disposal.

This rewriting and renewal of how the industry operates will also enable a rethink on where the sector should focus, which markets it seeks to operate in, and which areas it wishes to invest in and focus on.

In response to the Euratom concerns, trade and investment minister Greg Hands indicated that the government sees it as a challenge, but also an opportunity. “Our nuclear safeguarding and safety regime will continue to be forward-looking and our nuclear research and development expertise will remain pride of place. We will do this by seizing the global opportunity out there, harnessing the UK’s world leading capability,” he said.

Capitalising on new nuclear technologies

With its pipeline of proposed plants, even with the uncertainty that surrounds them, the UK stands as a major market for the global nuclear sector and will be in a good position to capitalise on companies seeking to gain access. With its strong research base and a strong domestic supply chain, the sector is in a good position to focus on the emerging opportunities of new technology.

Principal among these is the area of small modular reactors (SMRs). Essentially mini-nuclear power plants, SMRs are seen as having the potential to power towns rather than cities or entire regions, and while their operation and distribution are accompanied by far stricter and complex regulations than apply to conventional generation, they are nothing like as complex as apply to traditional nuclear power plants.

Produced in factories and transported to site, they are seen as a means of complementing larger developments in established markets and enabling those looking to take their first steps into the market to do so.

Discussing the potential of the market, Anurag Gupta, director of nuclear at KPMG UK, said: “SMRs promise all the benefits of nuclear – low cost and green power – but without the significant cost and schedule overrun issues that have beset conventional large nuclear projects.”

With British engineering giant Rolls-Royce backing a push for progress in SMRs in the UK and an industrial strategy that prizes economic opportunity as highly as decarbonisation, the UK stands in prime position to capitalise.

However, as the long lead-in time for Hinkley has shown, when it comes to nuclear power both government and industry kick difficult questions into the long grass. If SMRs are to have a chance of success, we first have to collectively decide whether we really want them.